Barclays Bank plc

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Barclays Plc
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Founded 1690
Headquarters London; operates in over 50 countries
Key People James E. Staley, Group Chief Executive Officer; John McFarlane, Group Chairman of the Board
Employees Around 147,000 people
Website www.barclays.com

Barclays Plc is a global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services. The company's investment unit, Barclays Global Investors, was acquired by BlackRock Inc. for $13.5 billion in June 2009. BlackRock paid $6.6 billion in cash and the rest in stock for the unit, which included its exchange traded fund business, iShares. Barclays retained a 19.9 percent stake in the combined company.

The company and its subsidiaries operate through six business segments: UK Banking, Barclaycard, International Retail and Commercial Banking, Barclays Capital, Barclays Global Investors and Barclays Wealth. The bank, like so many others, announced thousands of job cuts as a result of the U.S. credit crisis from 2008 to 2009.

On March 3, 2008, Barclays entered into an agreement with Petropavlovsk Finance (Limited Liability Society) to acquire 100 percent of the Russian bank, Expobank.

In April 2008, Barclays Capital acquired the assets of PowerLytix LLC, a provider of market data analysis. In July 2008, Barclays PLC completed the acquisition of 100 percent of Expobank, a Russian retail and commercial bank. Expobank became part of Barclays Global Retail and Commercial Banking Emerging Markets business. In August 2008, Barclays PLC started operations in Pakistan.

Starting in May 2014, Barclays cut 19,000 jobs across all the bank's divisions in a three-year cost reduction plan initiated by the new CEO Jes Staley, including cutting 7,000 jobs at its investment bank by 2016. Investment banking was reduced to no more than 30 percent of the Group’s asset base, and the company became more focused on client advisory services and asset management rather than trading.[1] Barclays also said it would also create a "bad bank" division consisting of £115 billion ($195 billion) in risk-weighted assets, including all its European retail-banking assets and some parts of the investment bank and exit the retail banking business in western Europe. [2] The bank reportedly plans to sell its retail-banking businesses in countries such as France, Spain and Italy. Michael Rake, the deputy chairman of Barclays, was quoted in the Wall Street Journal as saying, "It's just no longer doable for us to be a global, universal bank."

In the nine months after Jes Staley took over as chief executive in 2016, Barclays cut about 13,600 net jobs, or 10 percent of its staff, as part of Staley's three-year cost reduction plan. The cuts came mostly from attrition and a hiring freeze imposed in September 2016, as well as cuts in Barclays investment bank and European operations.[3] The reduction in jobs was part of an industry-wide response to the turmoil in global equities and commodities markets making it harder for investment banks to make money in traditional business lines.[4]

History

In September of 2008, Barclays agreed to buy Lehman's North American investment banking and capital markets businesses for approximately $1.75 billion after Lehman filed the largest U.S. bankruptcy case in history. The deal was modified slightly in court when lawyers for Lehman said the company's trading accounts had shrunk and appraisals for its property values, including its New York headquarters, had been disappointing.[5] The deal included Lehman's futures operation.

In mid-January of 2009, Barclays' group chief executive John Varley said it was right for banks to apologize for the role they played in causing the credit crunch. Varley said banks must continue to lend in the face of the crisis. He also said he supported greater action by the Bank of England, as Britain seemingly moved toward zero interest rates.[6]

In 2012 Barclays became the first bank to reach a settlement in the investigation into manipulation of the Libor benchmark, paying $450 million. The revelations from the investigation and pressure from regulators eventually led the bank to ousted its chief executive, Robert E. Diamond Jr. After Barclays admitted to misconduct regarding the Libor, the UK's FSA imposed a £59.5m penalty, and the US Department of Justice and the Commodity Futures Trading Commission (CFTC) imposed fines worth $160 million and $200 million respectively.[7]

In May 2014, Barclays was fined 26 million pounds ($43.8 million) for failures in internal controls that allowed a trader to manipulate the setting of gold prices one day after the bank was fined for rigging the Libor in 2012. The U.K. Financial Conduct Authority said it had banned former Barclays trader Daniel James Plunkett and fined him 95,600 pounds for exploiting weaknesses in the bank's systems. Plunkett fixed the price in order to avoid the payment of $3.9 million to a customer under an option, which boosted his own trading book by $1.75 million, the FCA said. The bank later compensated the client in full.[8]

In June 2014, a lawsuit by New York attorney general Eric Schneiderman accused Barclays of favoring high-frequency traders in its dark pool and then lying to clients about those participants' share of the trades. Barclays shares fell more than 5% on June 26 as investors anticipated a potential large fine against the company.[9]

The Wall Street Journal reported that some broker-dealers, including Deutsche Bank, Royal Bank of Canada and ITG, had removed connections to the dark pool, called Barclays LX, from their routing systems.[10] [11]

Bill White, the head of the firm’s Equities Electronic Trading operation, was removed from his position at Barclays, although he was not named directly in the lawsuit. His group ran the Barclays LX platform.[12]

On May 20th, Barclays plead guilty to criminal charges and was fined $2.4 billion by the SEC. CFTC, NYDFS, and UK's FCA. The charges were in response to the forex rigging scandal.[13] Additionally Barclays was $115 million fined by the U.S. Commodity Futures Trading Commission for its role in the ISDAFIX scandal on the same day.[14]

In August 2015 a federal judge dismissed a lawsuit against Barclays that was inspired by the book “Flash Boys: A Wall Street Revolt” by Michael Lewis. The suit alleged that Barclays and the U.S. stock exchanges defrauded investors in its dark pool and gave high-frequency traders an unfair advantage. In his opinion, the judge said the plaintiffs failed to show their complaints were “legally sufficient.” [15]

Products and Services

Barclays’ index benchmarking business was acquired by Bloomberg in December 2015 for about £520m ($781m). The deal ended Barclays’ nearly two-year effort to sell its risk analytics and index solutions business, which includes some of the fixed-income market’s most widely used indices.[16]

Key People

Management

Resources

  • Registered No: 1026167. Registered Office: 1 Churchill Place, London, E14 5HP

References

  1. Is Investment Banking Dead?. Forbes.
  2. Barclays to Cut Jobs in Bid to Reshape Itself. The Wall Street Journal.
  3. Barclays axes 13,600 jobs in 9 months. Reuters.
  4. Barclays to slash about 1,000 investment bank jobs worldwide. Reuters.
  5. Judge approves Lehman, Barclays pact. Reuters.
  6. Barclays Boss Backs Banks Apology For Credit Crunch. Yahoo! News/ AFP.
  7. A How-To Guide for Banks Facing Libor Settlements. New York Times.
  8. Barclays slapped with $44 million fine over gold price fix. Reuters.
  9. Barclays, Other Banks' Shares Slide as Light Shone on Dark Pool. The Wall Street Journal.
  10. Major Brokers Cut Ties to Barclays Dark Pool. The Wall Street Journal.
  11. Banks start to drain Barclays dark pool. The Financial Times.
  12. Bill White removed from daily job at Barclays during probe. MarketWatch.
  13. REFILE-Barclays fined $2.4 bln for FX manipulation, to fire 8 staff. {{{org}}}.
  14. Barclays agrees $115 mln ISDAfix settlement with CFTC. Reuters.
  15. Judge Dismisses Lawsuit Inspired by ‘Flash Boys'. The Wall Street Journal.
  16. Bloomberg Buys Barclays' Benchmarking Business. The Financial Times.